There's been a lot of discussion around whether or not the big five Australian publishers would trade with DSPs and agency trading desks. In recent weeks Fairfax has indicated that they will not be making inventory available through the automated channel. Recently ExchangeWire asked a number of leading Australian buy-side players the following question to get their perspective on the growing opposition among premium publishers to programmatic buying:

Given the recent push back by large content owners around automated trading, why should Australian publishers sell their inventory to DSPs and Trading Desks?

Here PHD's Alex Spurzem, Mediamind's Jordan Khoo, VivaKi's Ros Allison and Adconion's Alex Littlejohn discuss some of the key issues.

Alex Spurzem, Head of Search & Screen Trading, PHD Australia

I can’t think of any good reasons why publishers wouldn’t sell through exchanges. Currently there seems to be a lot of fear of the unknown and recent articles in the traditional trade press are testimony to how much confusion exists.

The first myth is that exchange trading is a channel for low cost inventory only. It’s a change driven by technology to phase out an archaic buying model and replace it with more automation - regardless of impression value. Yes, most currently available RTB inventory is lower value, comparable to networks, but the technology is pricing agnostic and delivers efficiencies for lower value and higher priced impressions. How to mix things, when to use public or private exchanges, and who to involve as bidders are the real questions I’d ask as a publisher.

Then there’s the fear that automated trading is a race to the bottom in terms of CPM, which I believe is unfounded. Publishers are free to set floor prices and as you open up inventory to multiple bidders, competition will naturally set the price at the highest valuation for each impression. In fact, many publishers who have embraced exchanges in the US and Europe have seen an increase in CPM due to auction pressure. In addition, this channel gives agencies a chance to overlay their data and certain impressions may become a lot more valuable, which opens a further opportunity for bid increases that otherwise doesn’t exist.

If I were a publisher I’d consider it a dangerous position to not be proactive in this area and instead stand by to watch things unfold.

Jordan Khoo, Regional Director, APAC, MediaMind

And so the evolution of online advertising continues.. the reminds me of 10 years ago when print publishers resisted online model and we all know how the story progress since then.
To focus on this new evolution, I believe that Australian publishers now have a great opportunity to relook at their current business model and re-segment their inventory according to premium and remnant due to this challenge.

Premium buys now must involve a lot more than just a CPM buy, and should include creative ideas, customized homepage takeovers, content sponsorships and also value added services. As for remnant inventories, while there will be pricing pressure on overall CPMs at the beginning, we believe, if the publishers get their strategy right , the increased demand in volume from advertisers (traditional search advertisers & full on DR advertisers) for these inventory will more than make up the CPM reduction through absolute revenue contribution.

So in short, my recommendation would be review, strategize, adapt and review again!

Ros Allison, Director of VivaKi Nerve Center in Australia

Ad exchanges provide an efficient channel for publishers to connect with multiple buyers - and with the same kind of controls they would expect for their direct sales teams. Publishers control which inventory is for sale, which advertisers and categories can and can’t buy it, and set varying minimum prices to optimise yields. They can sell branded, private or blind, and can create new revenue streams from rich data sets, by increasing the value of their audiences, or by decoupling data from impressions. It’s the opportunity for publishers to monetize more of their inventory, and get better value for it.

The ability for buyers to value impressions individually in real time, based on the data and the expected delivery, lifts the inventory out of the commodity market. Multiple bidders, with different objectives and data insights enables real value based on tangible metrics.

And by automating the process, reducing the intermediaries, and taking the bulk out of the transactions, we expect to have better and more direct relationships with publishers, to get on with building brands and delivering results for our clients.

There are of course issues to be managed; setting and adjusting the controls, managing data and ownership, and addressing the sales channel conflicts. But this is not a trend. It’s a major evolutionary shift and it is gaining momentum fast. The sooner publishers get involved, learn the technology and test marketplace parameters, the better placed they’ll be to face the future.

Alex Littlejohn, President APAC, Adconion Media Group

I don't believe Australian publishers should sell their inventory to DSPs and Trading Desks because publishers that allocate their inventory directly to DSP's run the risk of moving their position in the value chain further away from the end customer from a "retail" position to effectively becoming wholesalers. Furthermore, it is transparent to the end market that the inventory is available from the wholesalers via a new channel at a reduced rate card.

This is a dangerous proposition for Publishers that are aiming to protect their yields and continue to offer "premium" inventory to the same customers via their direct sales channel.

While some Publishers may view it as a valid approach if they are attempting to create a trading relationships in agencies where they lack traction, it's a short-sighted strategy that delivers no benefit to the publisher in the long term.

Once the DSP's secure the inventory and create enough scale, they can overlay their own and 3rd party data. Over time this means they will not require a direct relationship with the publisher on either a retail or a wholesale basis.

This introduction of data to the media buy (by the DSP's) is not just a threat to the Publisher selling their remnant inventory direct. It is also a threat to the publishers Premium Sales Channel as in many cases the over laying of data will create an even more valuable segment of users than those the publishers are seeking to attract via their investment in premium content.

By placing inventory directly in DSP's the Publishers are effectively giving up on maintaining a Premium Sales approach with those Agency groups.

A far smarter approach for Publishers with a view to the long term would be to partner with reputable Ad Networks that can monetize their excess inventory without providing the end customer with disclosure in the sales channel. They can then continue to market their premium products with clear lines and no dilution of their value proposition.

Because of the need for a balance between supply and demand in any healthy market place, this is the reason that regardless of the emergence of DSP's there will always be a place for the TOP 3 Ad Networks in each market - a point proven in the more mature markets around the world.

For those Premium Publishers under pressure from Agencies to contribute inventory - it is really a matter of who blinks first.